Given that most commercial real estate leases are upwards of 70 pages long, it’s easy to miss a few details here and there. That’s why it’s generally advised that you hire a tenant representative broker, as he/she will be trained to look out for the important parts of the legal jargon. However, whether you’re planning on utilizing the services of a tenant representative or not, there are a few hidden costs you should keep your eyes out for when scanning your new lease.

1. Electricity: Make sure you read the fine print when it comes to electricity in your new office space, because all contracts are written to try and confuse tenants (this works in the landlord’s favor). If you’re not careful, the number that you’re quoted could go up as much as 100% in a 5 year period. For example, on the day you move in, you could be paying $3.50/square foot for a 5,000 square foot space. This adds up to $20,000 a year for electricity. However, in most cases, landlords have clauses written into their leases that allow them to “survey” your space and then up your rate.

• A common practice is for the landlord to send in an electrical surveyor who will look at all your office equipment and make calculations presuming that everything is running full tilt 24/7.  This trick is called assessing electrical usage based on “connected load” as opposed to “demand load” or what you actually use.
• So even though you’re starting out at just $3.50/square foot, you could easily be forced to pay significantly more as early as the second month of your lease.

2. Freight Elevator Time: When you move into your new building, you can’t just lug those desks up the normal passenger elevator. You’re required to use the freight elevator, and unfortunately, this happens after business hours. This means that any moving has to be done after 5PM or on weekends. If you’re not careful, your landlord may charge you for the usage of the freight elevator, as well as for a union guard to be present.

• You could be looking at $500/hour to move in, and considering that moving an entire office space is going to take many hours, usage of the elevator quickly adds up.
• Tenants often don’t think they can negotiate the price or usage of the freight elevator. You heard it here first: you can negotiate just about anything. Make sure you talk to your landlord about using the freight elevator and perhaps, not being charged for doing so.

3. Light bulbs/Miscellaneous Maintenance: If you don’t read your lease carefully, your landlord might just include a cause that dictates that only their workers can change the light bulbs in your office space. That means they could potentially charge you $100 every time a light burns out. It sounds ridiculous, but if you don’t have it written into your lease that you, as the tenant, have the ability to change your own light bulbs, you’re looking at racking up them dollar signs pretty quickly.

4. Real Estate Taxes: We’ve touched on this before, but it’s of utmost importance to figure out how the real estate taxes in your building are being billed. You need to understand what will happen to you and your rent if the taxes of your building go out, and how those sorts of figures are calculated.

• In short, what is fair is that you pay a proportionate share of the real estate taxes above a base year.  What does this mean?  Let’s say the total real estate tax on a building this year is $1,000 and you have one of ten floors (10%).  Your base year should be equivalent to $1,000.
• In year 1, you don’t pay anything (remember you only pay your share above the base).  The next year the total real estate taxes go up $100 to $1,100.  You are responsible for 10% of the $100 increase or ten bucks.  Of course it’s impossible to know for sure what taxes will be going forward.  A reasonable estimate of what it will actually cost you (in NYC) is 35 cents per year starting in year two.

5. Preexisting Condition Clause: Most leases have a clause that states that when you move out of your office space, you must deliver it back to the landlord in its preexisting condition. That means all those walls you paid to put up must come down. All that specific task lighting you had installed must be uninstalled. That vibrant paint must be returned to builder’s beige. These sorts of expenses are negotiable, but don’t count them out – the more work you do, the more you could be paying to undo in the coming years.

In short, make sure you or your tenant representative broker read every last word of that lease, because if you’re not careful, you’ll end up paying out the ear for things you didn’t anticipate paying a dime for.